Outlook error 0x80040115 - can recieve but not send

I have one client running Outlook 2003 with Exchange 2003. He receives email fine but can't send. We get the error
"Task 'Microsoft Exchange Server - Sending' reported error (0x80040115) : 'The connection to the Microsoft Exchange Server is unavailable. Outlook must be online or connected to complete this action.'"

the computer is online and Outlook says it is connected. I created a new profile and I have the same problem. It also does not work when I open Outlook in safe mode.

I configured Outlook to use a proxy server and to use it for fast and slow connections. Sometimes this forces a username and password dialog box to come up. When that happens we can enter the information and it works for a short time.